Should I Start an LLC for My Elevator Installation and Repair Service?

Starting a limited liability company (LLC) for your elevator installation and repair service can provide several benefits.

Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.

For an elevator installation and repair service, lawsuits can arise from employee or third-party injuries that are a direct result of an elevator your service installed malfunctioning.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your elevator installation and repair service seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

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Do I Need an LLC for an Elevator Installation and Repair Service?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should start an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.

LLC Benefits for an Elevator Installation and Repair Service

By starting an LLC for your elevator installation and repair service, you can:

Protect your savings, car, and house with limited liability protection
Have more tax benefits and options
Increase your business’s credibility

Limited Liability Protection

LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.

Elevator installation and repair services will benefit from liability protection because of the risk of being sued for personal injuries and property damage.

Example 1: A client sues you after an elevator you repaired gets stuck between floors for hours with several people on it. Since your business is an LLC, limited liability protects your personal assets as the owner from being used to pay for the settlement.

Example 2: While doing a repair in an office building, an office worker trips over some tools and injures their neck. They are asking your business to pay for their medical bills. Limited liability from being an LLC keeps your personal assets from being used to pay for these bills.

Example 3: A fire breaks out while you are completing a repair and the client blames your repair service. They are threatening to sue you. Should your business be found in the wrong, the settlement could not take your personal assets since they are protected by limited liability from being an LLC.

Example 4: A client sues you after an elevator you repaired gets stuck between floors for hours with several people on it.

An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.

To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.

LLC Tax Benefits and Options for an Elevator Installation and Repair Service

LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.

The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.

Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.

S Corp Option for LLCs

An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).

S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.

The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.

In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.

We estimate that if an elevator installation and repair service owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.

You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.

Credibility and Consumer Trust

Elevator installation and repair services rely on consumer trust. Credibility plays a key role in creating and maintaining any business.

Businesses gain consumer trust simply by forming an LLC.

A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.

Northwest will start an LLC for you for just $29 (plus state fees).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a dependable LLC formation service to set up your LLC for a small fee
Or, you can choose your state from the list below to start an LLC yourself

Select Your State

For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.

Do LLCs Need Insurance?

Protecting your business’s assets can only be done by having proper insurance. The limited liability of an LLC will only protect the owner’s personal assets. Elevator installation and repair services need insurance because if anything goes wrong with the installation and damage occurs, insurance can help with the costs of the damage itself or a settlement.

Common Situations Business Insurance May Cover for an Elevator Installation and Repair Service

Example 1: As you repair an elevator in an apartment building, an apartment resident trips over your tools, breaks an arm, and decides to sue your business. General liability insurance would cover your legal defense costs and any required settlement.

Example 2: While hauling a large piece of equipment into a job site, you and your employee accidentally drop the equipment on someone’s luxury automobile. General liability insurance would pay for the vehicle repair costs.

Example 3: When an employee focuses on some repair work, he fails to see a woman walking behind him, backs up, and knocks her to the ground. The woman breaks her wrist in the fall and asks your business to pay for her medical treatment. General liability insurance would cover her medical bills.

Other Types of Coverage Elevator Installation and Repair Services Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all elevator installation and repair services should obtain.

Workers’ Compensation Insuranc

Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability or death benefits stemming from a work-related accident.

Professional Liability Insurance

While you strive to complete your elevator installation and repair work perfectly, there’s always a chance someone might claim your professional services caused them harm. If a client sues your business, claiming you made a mistake or failed to perform, professional liability insurance would cover your legal fees and any required settlement.

Commercial Property Insurance

You made a major investment in the equipment and supplies needed to establish your installation and repair service. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property. This includes structural damage to your building and the business materials you store there.

Commercial Umbrella Insurance

While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.

Should I Start an LLC FAQ

Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.

Visit our LLC vs. Sole Proprietorship guide to learn more.

At a minimum, you’ll need general liability insurance, workers’ compensation insurance, and professional liability insurance.

Read our Elevator Installation and Repair Service Insurance article for more info.

This will be a costly venture, possibly reaching the millions. Your mechanics earn about $80,000 each year, while design engineers will expect a $200,000+ salary. A single two-floor elevator can cost several million dollars from design to manufacturing. Tools, trucks, insurance premiums, office space, and a marketing team will all be part of starting this venture.

Visit our How to Start an Elevator Installation and Repair Business guide to learn more about the costs of starting and maintaining this business.

Payroll expenses will be significant, as elevator installation and repair employees earn relatively high wages. You also will have to maintain an office as well as purchase and maintain vehicles and equipment.

Learn more about running an elevator installation and repair service.

Elevator installation and repair businesses charge clients to install, maintain, and repair elevators.

Learn more about starting an elevator installation and repair service.

An elevator installation and repair service provides routine maintenance and installation tasks to clients, typically commercial companies.

A major elevator installation project can produce a significant profit but can take one to two years, while a 10% net profit on service calls is typical.

Learn more about starting an elevator installation and repair service.